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Definition of Affiliate

Depending on what exam you are taking, an affiliate can take on many forms. An affiliate among other things, is an individual who owns 10% or more of a company’s voting stock. In the case of a DPP, an affiliate is anyone who controls the partnership or is controlled by the partnership.

Applying "Affiliate" to Securities Exams:

A good guideline to follow when you need to determine if the party in question is an affiliate, is to start by answering the following question:, Is the party in a position to exercise control over the issuer or broker dealer?. In this case, the person who is an officer, director or 10 percent stockholder would meet the definition of an affiliate. Entities who are owned or controlled by the same parent company would also be deemed to be affiliated parties. For example, if a broker dealer and an insurance company were both owned by a large financial firm, the broker dealer and the insurance companies would be affiliated parties.

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